Airports (Amendment) Bill [HL]

Lord Empey Excerpts

Friday 16th March 2012 Lords Chamber

Moved By

[Lord Empey]

That the Bill be read a second time.

[Lord Empey]

My Lords, successive Governments have, for many years, implemented regional policies. These policies have been designed to prevent, or at least reduce, economic decline in those areas of the country that have seen their economic strength eroded as traditional industries contracted. These regional policies have been augmented by the European Union through the regional development fund. It is no surprise, therefore, that those of us who represent regions will, from time to time, look at government policy through the prism of regionalism to see whether our interests are being protected.

Early last year, I put down a Question for Short Debate which was eventually debated in Grand Committee on 15 November 2011. That debate covered the question of transport links between the regions and London. A number of noble Lords drew attention to the problems faced in different areas of the United Kingdom because of poor road or rail infrastructure. Aviation matters were also mentioned, as is pointed out in the briefing note prepared by the Library for this Bill today.

One of the principal requirements of a regional policy is to improve the competitiveness of a region. In order to do so, access is critical. This requires investment in infrastructure, which means having good communications by road, rail, air, sea and, in today’s world, broadband. The recently proposed acquisition of BMI airlines by BA has undoubtedly provoked interest in the matters we are about to debate. This has raised the wider question of the absence of any government powers to intervene in the trading of landing slots at Heathrow. This is a critical issue as far as I am concerned, as, unlike other European countries, the United Kingdom has only one hub airport. While I am not anticipating any immediate threat to important regional-to-Heathrow services, the fact remains that nobody can predict events. If a difficulty were to arise, the Government are powerless to act. I am entirely agnostic about the commercial take-over of BMI by the International Airlines Group, but I am concerned that the Government have no power to intervene.

As is the case in many policy areas, there is a significant European Union dimension to our deliberations. Aviation is a matter where we have ceded a competence to Brussels that is highly relevant to this Bill. Currently, EU Council Regulation EEC 95/93, as amended by Regulation EC 793/2004, provides a policy umbrella for the conduct of air connections between major hub airports and regions within member states. The preamble to the regulation states:

“Whereas it is necessary to make special provisions, under limited circumstances, for the maintenance of adequate domestic air services to regions of the Member State concerned”.

In practice, this means that if a national government believe that one of their regions is becoming isolated from another, they may apply to provide a public service obligation so that a subsidy can be paid to an airline to provide a connection between regions. This provision, however, does not allow for a PSO to be applied to a connection between two specific cities or between a region and a specific airport.

In the past few months, Brussels has been addressing a number of aviation issues. On 1 December 2011, the Commission produced an “airport package”, COM (2011) 827 final, which deals with a number of policy areas, landing and take-off slots being among them. On 19 December 2011, the European Parliament’s Committee on Transport and Tourism produced an own opinion draft report on the future of regional airports and air services in the EU, written by rapporteur Philip Bradbourn MEP. Paragraph 8 of that report states:

“considers it essential for regional airports to have access to hubs”.

That quotation from Mr Bradbourn’s draft report is the core rationale for this Bill.

On 29 February, I travelled to Brussels to have a series of meetings with members of the Transport and Tourism Committee of the European Parliament. I had a meeting with Philip Bradbourn, with other members of the committee, with our permanent representation in UKRep and, lastly, with the chairman of the committee, Brian Simpson MEP. During all my meetings there was great understanding of the UK’s specific issue and also considerable support for the proposals contained in this Bill.

What is our unique problem? Our specific problem in the UK is that we have only one major hub airport, Heathrow. Heathrow is operating at 98 to 99 per cent capacity. In other EU member states, where there is a connectivity problem with a hub airport, most of our continental partners have the opportunity to use spare capacity to add take-off and landing slots to accommodate connectivity between regions and hub airports but because of the lack of capacity at Heathrow that option is not open to the United Kingdom.

Furthermore, the slots at Heathrow are owned by individual airlines and if airlines should decide to sell their slots or use them for more profitable international routes, that, at present, is entirely a matter for them. The implications for UK regions of this could be profound. Our regions depend heavily on connectivity as a selling point and an incentive for inward investment and tourism, and adequate access to the national hub airport is essential. What a particular airline may say about its intentions is utterly irrelevant to this legislation, but even if an airline said it will keep a particular route open, it has the opportunity to reduce cycles and still maintain that it has kept its word.

As the landing and take-off slots in the UK are in private hands, any attempt to interfere in their free sale or transfer will lead to an interest being taken by the competition authorities in Brussels. To work effectively and to protect the regions’ access to Heathrow, the Bill gives the Secretary of State power to direct airport operators as well as requiring the Civil Aviation Authority to take these connectivity issues into account when exercising its functions. This may be deemed a power to ring-fence slots at Heathrow and that would have a knock on effect on their value. However, given the fact that Heathrow is operating at full capacity, there is simply no other way in the UK of guaranteeing adequate access from the regions to the hub.

I believe that our European partners will see the logic of this argument. It is, after all, consistent with the thrust of EU policy for many years to protect and promote the regions. As a former member of the EU Committee of the Regions, I know this to be a fact. Currently, the EU Committee on Transport and Tourism member Mr Giommaria Uggias of Italy is drafting a legislative report specifically on the slots issue and it is likely to be brought forward later this year.

This Bill is not region specific; it is a Bill that applies to the whole of the United Kingdom. Although I may come from Northern Ireland where the effects of inadequate air links to Heathrow would be felt most acutely, I am very aware that other regions could be badly affected as well. I have corresponded and spoken with a number of interested groups in Northern Ireland. I know that the Minister in the Northern Ireland Executive with responsibility for airports, Mr Danny Kennedy MLA, is supportive of ensuring adequate access. I believe that the relevant Assembly committee in Belfast takes a similar view. The Consumer Council for Northern Ireland approached me to offer support, and I have received letters from the local tourist board, the IoD, the CBI, Belfast City Airport and others.

Certainly a number of Scottish destinations, including Edinburgh, Glasgow, Aberdeen and Inverness, come to mind as well as cities in the north of England, such as Newcastle, Leeds and Manchester. Birmingham will eventually have the advantage of fast rail, and I know that plans are afoot to improve rail services to Cardiff. However, this still leaves the south-west somewhat isolated. In last week's edition of the Western Morning News, it said:

“Communications are the key to growth in the West Country”.

Some air links have been established with London City Airport, and Exeter is now a key gateway for the area connecting the West Country with Manchester. But the point remains that communications are the key to growth in the regions, and leaving the Government as a spectator, unable to intervene in the future if things go wrong with landing slots at Heathrow, is, I submit, unacceptable.

In conclusion, this Bill aims to amend the Airports Act 1986 to confer upon the Secretary of State the power to direct airport operators in the interests of ensuring sufficient national air infrastructure between hub and regional airports, and further, will ensure that the Civil Aviation Authority would also have to take into account the need to ensure adequate services between hub and regional airports when exercising its functions. I believe that these proposals are entirely consistent with current and previous government policies and are consistent with the intentions of the European Union’s policy, albeit that such policy would have to be modified to avoid a legal conflict with Brussels. The timing of this Bill sits neatly with the likely introduction of a UK aviation Bill later this year and, as previously stated, the European Commission already has proposals on the table for consultation.

The Minister, who I must thank for his assistance and that of his officials over recent weeks, knows that I fully realise that we have to act in concert with our European partners. He also acknowledges that currently HMG have no powers to address the specific problem of adequate access to Heathrow from the regions. Given these facts, and the proximity of our own domestic legislation coming through shortly, there is, I believe, a unique opportunity to deal with this issue in the immediate future. I trust that the Minister will give these proposals a fair hearing and a fair wind. I beg to move.

--- Later in debate ---

[Lord Empey]

My Lords, I can see the noble Lord, Lord Howell, in his place, hoping that I am going to go through a very detailed response to every speaker who has contributed this morning. I thank all who have contributed, because the debate has raised the fact that aviation issues in general are of great concern to many Members of the House. I hope that Members will forgive me for not dealing specifically with every contribution, but I want to raise a few points.

The noble Earl, Lord Caithness, as a former Aviation Minister, made a number of points about the commercial issues. Of course regional policy, which all Governments have followed since the 1950s, is by definition to some extent interfering with the market. If we did not interfere with the market to some extent, areas of this country would be laid waste. That is the practical reality. Why do we have the European regional development fund? Why do we have regional growth funds? All these things deliberately address a market failure. Aviation is no different. Although it would be nice to say, “Let us leave things and the market will fix it”, I assure noble Lords that the market will not fix it. At present, if you look at Heathrow, you see small regional aircraft parked that have a capacity of, may be, 34 passengers. They occupy one slot, whereas you have an A380 that may take 500 or 600 passengers for the same slot. Common sense dictates that it will not be long before someone in an airline somewhere works out that it is cheaper per head to land 600 people than 34 people.

The big issue economically, for me, is not specifically a Northern Ireland issue. I have tried to go out of my way not to make it a Northern Ireland issue. The issue is that at present, our Government, as they have conceded, have no power to intervene should the market decide to push the slots somewhere else; I got a very strong clue when the noble Lord, Lord McKenzie of Luton, got to his feet. Of course we welcome and enjoy the links with Luton, Stansted and so on, but we are talking about the narrower issue; my colleague, my noble friend Lord Rogan, made it very clear as a businessman himself that, if you do not have the international connections, businesspeople are not going to travel for hours between airports at great inconvenience to themselves to get to a region. It is a disincentive which goes against the grain of all the millions of pounds we pour into regional policy in this country year after year.

Given the time, I will perhaps not address the wider issues that the noble Lord, Lord Soley, and a number of other noble Lords addressed, although I have to say that we must have an answer to those questions. I come to the point about the European dimension to this. We have a unique opportunity because, by sheer coincidence, the European Union is addressing these matters in parallel with us. I fully understand what the Minister said. I have been out there. I believe we have the opportunity to make a strong case to the European Union. I believe we will have support out there—I know we have, certainly in the Parliament of the European Union. Although the Parliament is not the final decider in this case, I assure noble Lords that the growing influence of the Parliament over the Commission and in codecision-making in a number of areas will give us an opportunity in the coming months, as the year progresses, to negotiate with the European Union so that, ultimately, something like the Bill will be compatible with our European obligations. I understand the Minister’s position at present, and I do not seek to put us in conflict with our European partners. To coin a phrase that is a bit colloquial, I do not intend to go away on this issue, you know. The fact is that we have local interests to protect at home, but this is a UK issue.

I have to tell your Lordships about the destinations that are available. You can fly from Amsterdam to Belfast and, as the noble Lord, Lord Soley, made clear, to far more cities than you can from Heathrow. The commercial value of those slots is, I think, between £20 million and £30 million each. Common sense dictates that, unless Heathrow has extra capacity, ultimately the only way to protect access to it from the regions will be through some form of intervention. We do not have the power to do that at the moment and we would be in conflict with Europe if we did, but I think that there may be an opportunity to do so, particularly this year, as reports are being drafted in Brussels right now. I believe that we have the ear of the Parliament and many of the people associated with it, because they are working through the same process themselves.

I strongly believe that we are doing the right thing at the right time. It may not be perfect—I fully understand that it needs a lot more work—but, if we pull together and work with our European partners, I believe very strongly that we will be able to bring forward a series of proposals that will provide a guarantee for the future. Let us not get too hung up about the commercial deals before us today. It is the long term that we are trying to protect, and this will give us an opportunity to protect regional connectivity for the long term. All regional policy will fail if we do not have adequate connections.

Bill read a second time and committed to a Committee of the Whole House.